AN ASSESSMENT OF E-BUSINESS STRATEGIES USING THE
STRATEGIC ALIGNMENT MODEL
Rival, Yann, CREPA, Paris Dauphine University, France.
Yann.rival@dauphine.fr
Abstract
Most research concerning e-business offers a methodology, measures the predisposition of the firm or evaluates the consequences in terms of management. Few authors attempted to develop specific constructs and models for analyzing and evaluating e-business. This is why this paper aims at designing a model for assessing e-business strategies based on the strategic alignment perspective. Using the Information Systems (IS) literature about alignment and data collected from 11 interviews of general and e-business managers from the main companies of the French tourism sector, 12 variables were identified. These, in turn, can be used to build an e-business alignment model for the enterprise. Using this model, firms which have been developing an internet-related strategy over the past few years can assess their own decisions and actions concerning the Internet and are able to compare them to their competitors’.We decided to apply this investigation to a sector where firms did a lot in e-business: tourism.
Keywords: E-business, strategy, Information Technologies (IT), Information Systems (IS), alignment, model, Internet, tourism
INTRODUCTION
Criticized and even put into question, after the 2000 “e-crack”, e-business is present today, more than ever, in the activity of the firms.
If we only take a look at the B to C revenue of 2003, Europe raised 29.81 billion euros and the U.S.
raised around 552 billion dollars with annual increase rates reaching up to 50%, depending on sectors.
Authors often give diverging definitions of the term “e-business”. What we propose here is a simple definition: the integration of Internet technologies within the firm, especially in order to present
and sell products and services through a website.
This paper first describes the main trends in e-business research and then presents the Henderson and Venkatraman strategic alignment model (1993).
Finally, from the strategic alignment perspective, this research proposes an assessment model for Internet strategies: an e-business alignment model.
1. DIFFERENT RESEARCH APPROACHES ABOUT E-BUSINESS
1.1 Three main trendsE-business succeeded to become a strategic reality in the heart of the firms business and was the
subjectof different research. We can distinguish three main trends in e-business research (Table 1).
The first trend presents a methodology for integrating Internet within the organization: how to do
e-business?
This trend consists in suggesting the right solution to successfully build an e-business strategy (Venkatraman, 2000; Kulatilaka et al., 2001).
Secondly, authors propose models measuring the predisposition of the firm for electronic commerce (Pillet et al., 2002), identify key factors for developing e-commerce (Ang et al., 2001; Raymond et al., 2002) or Internet (Limayem et al., 1999), in the organization. Others, finally, investigate the IT core
capabilities (Van Der Heijden, 2001) or IT infrastructure capabilities (Vitale et al., 2002) needed to
develop e-business.
The second trend studies Internet technologies and the developmental impact on the management of the firm: how to manage e-business?
It is necessary to take into account this impact on the organization of the firm (Kalika, 2000), the IS direction (Earl et al., 2001; Ross et al., 2002) and the firm’s performance (Monod, 2002).
Finally, the third trend builds a specific framework to analyze e-business: how to analyze e-business? Some research aims at updating strategic management tools like the Value Chain (Porter, 2001; Rayport et al., 1995), The Industry Structure analysis (Porter, 2001) or even classical portfolio strategy maps (Tjan, 2001).
This research trend also attempts to evaluate the quality of a web site (Palmer, 2002) or the Internet consumer satisfaction (Devaraj et al., 2002; Mc Kinney et al., 2002). Finally, this trend presents assessment models and theories for the e-commerce activity of the firm (Nickerson, 2002; Wheeler, 2002).
Trend Question
Methodology How to do e-business? Managerial impact How to manage
e-business? Analysis How to analyze
e-business?
Table 1- Main trends in e-business research
1.2 Methodology
In an exploratory approach, 11 interviews were made between June 2002 and October 2003 with general and e-business managers from the main companies of the French tourism sector. The semi-structured interviews focused on different subjects: Internet impact in the tourism sector, description
of the e-business project of the firm, relations between e-business managers and general managers, current results of the e-business activity and objectives for the next years.
All the interviews were recorded (10 hours), transcribed (88 pages) and analyzed using a thematic categorization.
1.3 A real need
Concerning e-business, managers have learned more on their own through experimentation than through research (Malone, 2001). Moreover, the 11 interviews indicate a real need. Indeed, firms which have been developing an internet-related strategy over the past few years now need to assess
their achievements. Today, it is necessary for them to stand back in order to assess their own decisions and actions concerning the Internet and to be able to compare them to their competitors’.
This is why we propose an assessment model of e-business strategies in agreement with the trend of research aiming at designing a framework for the analysis of e-business.
2. THE STRATEGIC ALIGNMENT MODEL AS A FRAMEWORK FOR ANALYSIS
2.1 PresentationThe e-business strategies model proposed in this research is based on 1993’s Henderson and
Venkatraman work.
It suggests that strategy and IT developments must be coherent. The strategic alignment
between business strategy and IT strategy is derived from two main relations:
- The strategic fit between the external and internal scopes of the firm
- The functional integration of IT within the enterprise
These links are drawn between four elements: Business Strategy, Business Infrastructure and
Figure1- Strategic Alignment Model, adapted from Henderson and Venkatraman, 1993
This innovative model goes further than the traditional linkage between business activity and
IT by dividing IT functions into two elements, operating a distinction between IT strategy and
IT infrastructure and process.
The most important objective for managers is not to reach alignment but to find the alignment
perspective that best corresponds to the firm.
What strategic alignment aims at goes beyond partial fit. It is an attempt at simultaneously
taking into account the complex relationships between strategies, structure and technology.
2.2 Use
Strategic alignment model for IS/IT can be applied to Internet technologies. If we consider
e-business strategy as emerging from Internet technologies, the Henderson and Venkatraman
model would enable us to assess the congruence of the e-business strategy with the rest of the
firm. Today, however, there are very few, if any, studies that apply the strategic alignment
model to the e-business activity of the firm.
Finally, today, as the potential or competitive advantages deriving from IT in the new
economy have become crucial, the development of e-business puts forth the use of IT and
brings into the foreground the strategic alignment concept.
Business Strategy IT Strategy
Business Infrastructure and Processes IT Infrastructure and Processes Strategic Fit Strategic Fit Functional Integration Functional Integration Cross-Dimension Alignments Key
3. AN E-BUSINESS ALIGNMENT MODEL
3.1 ConstructionThe model is divided into 4 levels connected to 3 main relations (Figure2).
We define e-business alignment as the fit between the E-business Strategy of the firm (elaboration and application processes of the e-business strategy) on the one hand, and the Business Strategy (elaboration and application processes of the business strategy), the organization of the firm (structures and organizational processes), and the E-business structure (technological infrastructure and processes) on the other hand.
Put together, strategic business alignment, organizational business alignment and technological e-business alignment constitute what we call the e-e-business alignment of the firm.
Figure 2 – Proposition for the representation of E-business Alignment.
Strategic E-business Alignment Organizational E-business Alignment Technological E-business Alignment
Fit E-business Strategy E-business Alignment Business Strategy Organization E-business Structure Key
3.2 Variables
From the IS literature describing factors that inhibit or facilitate alignment, and the data collected in the 11 interviews conducted between June 2002 and October 2003 with general and e-business managers of the main companies of the French tourism sector, 12 variables were identified and adapted to the e-business activity (Table2). We can then with these variables characterize the different relations within the e-business alignment representation and obtain an e-business alignment model proposition (Figure 3).
Relations Variables Meaning References
Communication between managers
Regular exchange of information between managers during the elaboration and application of strategies
Lind and Zmud, 1991; Reich and Benbasat, 2000; Van Der Zee and De Jong, 1999
Collaborative planning methods
Planning process including the activity
Broadbent and Weill, 1993; Reich and Benbasat, 2000; Lederer and Burky, 1989; Zmud, 1988 Valorization Consideration of the
activity by other functions of the firms
Amabile and Gadille, 2002; Ciborra, 1997; Reich and Benbasat, 1996; Interviews
Strategic E-business Alignment
Implication in the strategy Implication of the activity in the strategy
Broadbent and Weill 1993; Interviews
Organizational change choice
Choice of adapting the organizational structure of the firm to the activity
Amami and Rowe, 2000; Interviews
Resources shared Sharing of resources in the establishment of working methods
Ives, Jarvenpaa and Mason, 1993 New processes Creation of new processes
for the activity in the firm
Broadbent and Weill, 1993 Functional integration Level of integration of
Internet-based technologies within the different departments of the firm
Amabile and Gadille, 2002; Interviews Organizational E-business
Alignment
Relationship Inter-functional
relationships: existence of inter-functional teams and exchanges between functional managers.
Broadbent and Weill, 1993; Boynton, Zmud, and Jacobs, 1994; Clark and Fujimoto, 1987; Luftman, 1997; Rockart, Earl and Roos, 1996; Interviews Complementarity Complementarity in
technological investments
Amabile and Gadille, 2002; Henderson and Venkatraman, 1993 Development Development of a new technological architecture Henderson and Venkatraman, 1993; Interviews Technological E-business Alignment
Technological integration Integration of existing technological resources
Rockart, Earl and Roos, 1996; Interviews
Figure 3- E-business Alignment Model proposition
3.3 Research prospects
The Alignment trend has been much criticized because of the weakness of its empirical results. It is true that measuring alignment in practice is a rather difficult exercise.
Instead of statistical approaches based on co-variation, which have showed their limits, we
decided to build an instrument to measure alignment with factual indicators of the fit. To do
so we are adapting scales measure of alignment described in the IS literature, to the e-business
activity, to establish a questionnaire that will be sent to the e-business or general managers of
companies from the French tourism sector.
Then the validity and reliability of the model could be tested.We decided to apply this investigation to a sector where firms did a lot in e-business: tourism. Tourist products and services essentially contain information and are perfectly adapted to the Internet. This is why tourism represents one of the first sectors on the web. For instance, in the US tourism market,
around 203 % of transactions were made on the Internet in 2003. The same year, in Europe, 274 % of
travelers used the Internet to find information or make a reservation.
Strategic E-business Alignment Organizational E-business Alignment Technological E-business Alignment
Communication between managers
E-business Alignment
Collaborative planning methods
Valorization
Implication in the strategy
Organizational change choice
Resources shared New processes Functional integration Relationship Complementarity Development Technological integration
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